The origin of the Usher of the Black Rod goes back to early fourteenth century England . Today, with no royal duties to perform, the Usher knocks on the doors of the House of Commons with the Black Rod at the start of Parliament to summon the members. The rod is a symbol for the authority of debate in the upper house.
We of The Black Rod have since 2005, adopted the symbol to knock some sense and the right questions into the heads of Legislators, pundits, and other opinion makers.

About Me

We are citizen journalists in Winnipeg. When not breaking exclusive stories, we analyze news coverage by the mainstream media and highlight bias, ignorance, incompetence, flawed logic, missed angles and, where warranted, good work. We serve as the only overall news monitors in the province of Manitoba. We do the same with politicians (who require even more monitoring.) EMAIL: black_rod_usher@yahoo.com

A Swedish hydro-power expert has given a thumbs-up to Manitoba Hydro's next big dam in northern Manitoba.

Bernt
Rydgren's report is far from the final say on the estimated
$6.2-billion Keeyask generating station project, but Hydro maintains it
goes a long way toward demonstrating the Crown utility has set a new
globally recognized standard in how large hydroelectric projects are
developed and built.

Undaunted
by the length and subject matter, we dove right in, only to discover
that reporter Owen had somehow overlooked the most important finding of
the Swedish hydro-power expert, the part that read (under the heading
Economic Viability):

"Analysis of significant gaps against proven best practice

There
is not enough evidence at this stage to argue that benefits of the
project outweigh costs under a wide range of circumstances."

And...

"This
assessment was undertaken before the economic analyses of the Keeyask
project have been finalised...There is one significant gap against
proven best practice, in that positive outcomes of the economic
viability analysis cannot at this stage be assuredunder a wide range
of circumstances..."

It started to feel cold in the room.

And the deeper we read, the lower the temperature dropped.

The report was chock full of information that Manitoba Hydro would prefer you didn't know.

Starting
with the fact that although Manitoba Hydro intends to spend an
estimated $5.6 billion to build the Keeyask power station, IT WON'T OWN
IT.

Keeyask will
be OWNED by an entirely different company, a private company, Keeyask
Hydropower Limited Partnership (KHLP), which will be a subsidiary of
Hydro. The utility will own at least 75 percent of the equity in the
private company and a group of four northern Indian reserves will own
up to 25 percent.

Hydro will BUY power from the private company.
Yes, that's right. Manitoba Hydro will pay all the costs to BUILD the
Keeyask power station, then turn it over to this other company and BUY
power from them.

Hint:
when you buy something from someone else, the price you pay includes a
profit for the other party. Nobody is in business to lose money. So,
we will build the dam to produce power, then pay another company to buy
from it, the power we have paid to produce.

So the other company can make a profit from the power we paid to create in the first place.

New Democonomics at work.

Who
will be "our" partners? Fox Lake Cree Nation, population 1010;
Tataskweyak Cree Nation (Split Lake), population 3000; War Lake First
Nation, population 235; and York Factory First Nation, population 1060.
Of the 5300 members, only half live on reserve.

But they're about to co-own an asset worth amost six billion dollars.Their share alone is equity worth $1.4 billion.

How much will they contribute towards the project? Nothing.

The
province of Manitoba will borrow money which it will then lend to
Manitoba Hydro, which will, in turn, lend to the Cree quartet, which
will then put it into the private partnership.

The Indian reserves then get a number of options. "...the
individual KCN can choose between two different investment option, the
so called “preferred” (all loans from MH are forgiven) or the “common”
(loans will be repaid from profits). The “common” approach has
potential upsides while the “preferred is a more secure approach. With
either option, the guaranteed minimum return on investment will be
equal to MH’s cost of long-term borrowing less 1.5%, which is currently
projected to be approximately 4.8%."

Oh, and they can "share" profits before their loans are paid off.

Not bad, eh. No money down (or at least none of their own), 4.8 percent return on "investment", and no need to repay Hydro for loaning the money to buy in.

Oh, and it gets better:

"Financial
returns for the KCN include guaranteed annual payments under the
Adverse Effects Agreements, and if they chose to invest in the project,
probably some guaranteed minimum revenues and protections for the
principal invested (resulting in a higher internal rate of return for
the KCN than for MH). "

One thing eventually becomes very clear. This is more than a hydroelectric development.

This
is a giant welfare entitlement---being paid for by a public utility to
avoid scrutiny by the Legislature and to escape political
accountability.

If you read deep enough into the "Swedish expert's report you'll find this admission:

"...one
rationale for the project is as a vehicle for regional socio-economic
development and a way to address legacy issues from past hydro
developments with high social costs and few social benefits..."

But the impact of this deception will be disastrous.

Hydro rates will be raised 3.8 percent a year for at least 18 years. And that's not counting the additional 2.5 percent they'll be asking when the next drought hits, which is predicted to be between now and 2018, i.e. sometime in the next five years.

The
Keeyask generating station is just part of Hydro's plans for $34
billion in spending to the coming years. Swedish hydro expert Bernt
Rydgren casually describes the impact of this scheme like this:

"MH
will undertake several major capital projects in parallel, including
Bipole III (CAD 3.3 billion) and Conawapa hydropower generating station
(CAD 7.8 billion). Borrowing for these projects will push the
equity/debt ratio below the target ratio of 25/75. It will drop to 12/88
by 2021 before recovering to 25/75 by 2030. The interest coverage
ratio will remain below the target of 1.2 until 2024."

The Black Rod first raised the alarm over the interest coverage ratio one year ago, staring with an explanation of what it is and why Manitobans should be scared stiff.

The
interest coverage ratio is a measure of whether a company can cover
its interest costs. Here's how investopedia.com explains it:

http://www.investopedia.com/terms/i/interestcoverageratio.aspInvestopedia explains 'Interest Coverage Ratio'"The
lower the ratio, the more the company is burdened by debt expense.
When a company's interest coverage ratio is 1.5 or lower, its ability
to meet interest expenses may be questionable. An interest coverage ratio below 1 indicates the company is not generating sufficient revenues to satisfy interest expenses."

The
Hydro report touted by the Winnipeg Free Press says Hydro's ratio will
be BELOW 1.2 for the next ten years, at least. That's well below the
minimum cited by Investopedia. But that's not even the worst of it.
Hydro's own forecasts say they expect the interest coverage ratio to
drop below one percent within that time !

Let's spell it out. Manitoba Hydro is flirting with losing its credit rating! And with it will go the credit rating of the province of Manitoba, since the government backstops Hydro's debt. And Hydro intends to more than double Manitoba's total debt.

With no public debate, no mandate from Manitobans, the government is:

* privatizing Hydro resources by giving ownership of new dams to private companies* building a massive, and secret, welfare entitlement program that will drain tens of millions of dollars from public coffers* committing Manitobans to almost two decades of steadily rising rates to cover the welfare program* guaranteeing payments to private "partners" of hydro projects even when there are no profits* racing to the precipice where Hydro and Manitoba lose their credit ratings